Brazil dam disaster: Government to sue Samarco and its shareholders, BHP Billiton and Vale

The lawsuit follows the R$250m fine imposed on Samarco, which is equally owned by Australian BHP Billiton and Brazil's Vale, by IBAMAReuters

Brazil's federal government and two states are to sue mining firm Samarco and its shareholders, Australian BHP Billiton and Brazil's Vale, over an iron ore dam burst. The companies could be sued for at least R$20bn (£3.5bn, €4.9bn, $5.2bn) over the disaster that occurred on 5 November, leading to an environmental catastrophe.

The Advocacia-Geral da União (AGU), which is the Brazilian institution responsible for the exercise of public law at the federal level, announced the civil damages lawsuit on 27 November. Minas Gerais and Espírito Santo, the two states which were most affected by the disaster, would join the federal government in the lawsuit.

"The object is to use the resources to help with the containment of the impact, the revitalisation of the Rio Doce basin and the indemnification of people affected by the disaster," the AGU stated. The accident was described by the Brazilian government as the country's worst environmental catastrophe.

The dam burst released 60m cubic metres of mud into the water systems of hundreds of town and cities downstream. Earlier it was reported that as many as 16 people were feared dead and 45 others missing.

Both Vale and BHP who are equal owners at Samarco said that they were not involved in the day-to-day functioning of Samarco. They announced that they would set up a fund for restoring the environment in the Rio Doce basin but did not specify the size of the same.

The AGU said that it will propose to the court that money paid by the miners should instead of going to the coffers of the federal government or the states involved in the accident should flow into a fund that will be exclusively used to finance repairing the damages. This lawsuit follows the R$250m fine imposed on Samarco by IBAMA, a Brazilian institute that was created to ensure the preservation and maintenance of the environment.

The companies have come under more pressure after the UN said that the mine waste released from the accident covered 850km, equivalent of 20,000 Olympic swimming pools, and contained toxic chemicals and heavy metals.

Vale said it was "surprised" by the choice of legal action because "Vale, BHP and Samarco had shown themselves to be open to dialogue on the issue". Shares of both BHP and Vale were down in 27 November's trading session.